Research On RMB Appreciation Tendency And Its Influence On China Exports

RMB exchange rate has been rising since its reform on Jul. 21, 2005. RMB appreciation caused much attention and discussion, and much of them were connected with China exports. Firstly, this paper analyzes and points out that RMB exchange rate will keep a long, gradual appreciation tendency in future. Secondly, this paper analyzes the process and the results of the influence of RMB appreciation on China exports from two aspects—export prices and export competitiveness. Such analysis will not only show what influence RMB appreciation makes on China exports, but also explain its reasons. It will give reference on how to deal with the relations between the reform and China foreign trade balance.This paper consists of four chapters:Chapter One analyzes the changes of RMB exchange rate since its reform and points out the long, gradual appreciation tendency of RMB exchange rate in future.Chapter Two analyzes the influence of RMB appreciation on China export prices from different aspects, including export costs, export structure and pass-through of exchange rate to export prices. It is found that RMB appreciation causes the rise of China export prices but the prices rise much less than the appreciation.Chapter Three analyzes the essences of China export competitiveness, the demands of import markets and the substitution by the export competitors, and finds that China export competitiveness will not be lessened though the export prices will rise due to RMB appreciation.Chapter Four comes to the conclusion that RMB appreciation influences China exports little. There are two suggestions: 1. The reform of RMB exchange rate system should not be restrained by the pressure of exports. 2. The other ways instead of RMB appreciation should be considered and adopted to adjust China foreign trade balance.